A Los Angeles firm has quietly assembled a Trojan horse electric car designed to carry the Chinese military-industrial complex deep into America's auto market. Detroit should be afraid, very afraid. And anyone in the U.S. unemployment line — along with American taxpayers, who are subsidizing this sham — should be outraged.
The car is branded Coda and debuted at the L.A. Auto Show. While Coda Automotive salespeople were eager to portray it as "All American" — we got one of them bragging about it on camera — its entire chassis and battery system and most of the metal (apparently 65% of the car) come from China's factory floors, which are not known for their high labor standards.
From a jobs perspective, the Coda's arrival means this: American electric carmakers such as California-based Fisker Automotive and Tesla Motors, along with the GM Volt and Ford's Focus Electric, will compete on home soil with a company benefiting from all of the unfair trade practices China has used to bury so many other American industries — from toys, textiles and machine tools to electronic assemblers and, most recently, solar panels. These practices range from currency manipulation to reported illegal export subsidies, counterfeiting, pollution and widespread worker abuses.
Taxpayers should be outraged because the Coda is eligible for the combined federal and state tax rebates on electric vehicles of $10,000 a vehicle, while China blatantly blocked the Volt from its Chinese green subsidy unless GM manufactured it in Shanghai and turned over design secrets.
These economic considerations notwithstanding, a closer look at Coda's supply chain reveals a darker truth. The "new" Coda is actually an updated variation on the 6-year-old Saibao from China's state-owned Hafei Motor Co. Hafei is a division of Changan Automobile Group, which in turn is controlled by China Weaponry Equipment Group. This state-owned enterprise supplies China's aggressively expanding military, and its parent, China South Industries Group, owns half of arms dealer Norinco, which reportedly tried to smuggle guns to Libya during the last days of the Kadafi regime.
Norinco's other bloody trade has included transferring missile technology to Iran, attempting to sell AK-47s to U.S. street gangs and selling nearly $70 million in arms to Zimbabwe's Mugabe regime. So, before considering a Coda as a means of going green, remember all the red blood shed by Coda's real backers.
And speaking of backers, it is disquieting and disgusting that the Chinese government has been able to put so many prominent American faces on such a job-killing venture. Coda CEO Phil Murtaugh is the former head of GM's China division, and the company has raised more than $300 million from banks such as Morgan Stanley and well-connected private investors that include former Clinton White House Chief of Staff Mack McLarty and former Goldman Sachs CEO Henry Paulson.
Paulson's role in saddling up the Coda Trojan horse is particularly galling. As Treasury secretary under President George W. Bush, he repeatedly refused to brand China a currency manipulator; this inaction contributed to the loss of tens of thousands of American factories and millions of American jobs. According to Nobel economist Paul Krugman, China's currency manipulation alone costs America up to 1.5% of its GDP every year, and Economic Policy Institute economist Robert Scott suggests this kills as many as 3 million U.S. jobs. Now, Paulson stands to personally profit from China's currency manipulation and other unfair trade practices as an investor in a venture that would worsen the U.S. trade deficit and swell U.S. unemployment lines.
Finally, another Coda enterprise adds insult to injury: a planned Ohio battery factory to be built with more than half a billion in U.S. taxpayer stimulus bucks, including an Energy Department loan and incentives from the state of Ohio and the city of Columbus. Great, except that a Chinese-dominated joint venture with Tianjin Lishen Battery will really own it. That's an enormously expensive way to create "up to" 1,000 jobs, with potential millions in profits shipped back to China.
When more than 20 million Americans can't find a decent job and millions more don't earn a decent wage, the last thing we need is China invading the U.S. auto market and getting U.S. subsidies under the false pretenses of helping Americans "go green and buy American."
Greg Autry and Peter Navarro are the authors of "Death By China: Confronting the Dragon — A Global Call to Action." They teach at UC Irvine's Paul Merage School of Business and blog on the Huffington Post.